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Public companies headquartered in Oklahoma ranked for 2019 in latest Oklahoma Inc. edition

Storage tanks for oil are seen on a well site in the STACK play of northwest Oklahoma in 2018. Crude oil prices declined by about 21% between July 1, 2018, and June 30. [OKLAHOMAN ARCHIVES]

Investors in U.S. stock markets were taken on a roller-coaster ride between July 1, 2018, and June 30 of this year.

Oklahoma’s publicly traded companies also were affected by that wild and wacky year, according to data provided by S&P Global Market Intelligence.

The data was used by S&P to rank publicly traded companies headquartered in Oklahoma during that time period to create the 2019 version of Oklahoma Inc.

Generally, the markets’ performance during that 12 months doesn’t appear to have been too bad. The Dow Jones industrial average's total return (price change plus dividends reinvested) was 12.2%, while the Standard & Poor's 500 index climbed about 10.4%.

But Brad Zerger, a senior vice president and the chief trust investment officer at BancFirst, said the period had more than its fair share of volatility. The S&P 500 Index, for example, lost nearly 14% in total return during the fourth quarter of 2018, only to recover a similar amount the first quarter of this year.

Likewise, the Russell 2000 Index, which tracks publicly traded stocks of smaller companies, fell by 20% the final quarter of 2018, then recovered 15% the first quarter of this year.

And from July 1, 2018, through June 30, smaller companies’ stocks declined by a little more than 3%.

Those trends were somewhat different than they were the previous year, when most Oklahoma companies benefited with others across the country as the global economy appeared to be expanding and oil prices climbed.

Zerger said factors contributing to recent market volatility included the Federal Reserve’s monetary policy and increased trade tensions between the U.S. and China.

The Federal Reserve tightened monetary policy in 2018 and, with its last rate hike in December, indicated it planned to continue to hike interest rates into 2019. But that contributed to a decline in stocks in December, with the S&P 500 Index losing 9% that month alone.

Then, early this year, the Federal Reserve pivoted in an attempt to keep the nation’s economy on track.

Meanwhile, commodity prices also fell.

The price for West Texas Intermediate oil at Cushing fell from about $74 per barrel in July 2018 to just more than $58 per barrel in June, a decline of about 21%. The Henry Hub Natural Gas Spot Price fell 18% during the same period, ending June at $2.42 per million BTU.

Finally, the Alerian MLP Index, a proxy for master limited partnerships, returned only about 3.1% to investors during the 12 months that ended June 30.

Zerger said that index also exhibited volatility, declining just more than 17% in the fourth quarter only to rebound by almost the same amount in the first quarter of 2019. Added to that, energy stocks as measured by the S&P 500 Energy Sector lost 13% during the 12 months ending June 30.

Not good things for Oklahoma Inc., as it remains heavily populated with energy companies.

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“As with any commodity sensitive business, the value of that business will fluctuate with the underlying commodity price, with all else being equal,” Zerger said.

2019 rankings

Of the 33 companies that comprise this year’s Oklahoma Inc. rankings, 25 of those are involved in the energy industry as exploration and production, midstream or support operators.

As usual, most of the top 10 companies for 2019 are connected to the energy industry.

But this year’s list looks a little different than 2018’s.

The top performer this year is NGL Energy Partners, a Tulsa-based firm that provides multiple services to producers and end-users including the transportation, storage, blending and marketing of crude oil, NGLs, refined products/renewables and water solutions.

The company posted a total return of 34.8% and grew its earnings per share by nearly 229%. Its 2018 Oklahoma Inc. ranking was 16th.

Matrix Service Co., Cypress Energy Partners, Magellan Midstream Partners and Mid-Con Energy Partners all also made their way into this year’s top 10 after being in the mid- to lower-rankings the previous year.

Continental Resources, last year’s top company, dropped to 27th place in this year’s list.

Other companies making up the top four on the 2018 Oklahoma Inc. list also were ranked lower this year. Mammoth Energy Services fell from a second-place ranking to the bottom of this year’s list, while Helmerich & Payne dropped from a third-place 2018 ranking to 20th. Unit Corp. fell from fourth to 31st this year.

Only two exploration and production companies, WPX Energy and Devon Energy, are part of this year’s top 10 performers.

The 33 companies traded on major exchanges ranked as part of 2019’s Oklahoma Inc. posted an average one year total return including stocks and dividends of -20.2% between July 1, 2018 and June 30 of this year. Paycom had the best total return at 129.4%, while Roan Resources had the worst, at -95.5%.

The average percentage of change in revenues for the companies on this year’s list was 25.2%, with Roan at the top of that measure with 139.1% and Mammoth at the bottom with a -28.5%.

As for a percent change in earnings per share, Chesapeake Energy was best in that category, up 9,100%. The worst was Roan, at -1,100%.

Observations

Greg Womack, president and principal of Womack Investment Advisers, said most of Oklahoma’s publicly-traded companies faced significant headwinds during the July 1 2018 to June 30 period.

However, Womack agreed that companies that had worked hard to reduce their debt over that time generally were more successful than their peers.

“It is a pretty tough environment with commodity prices still low,” Womack said, adding, “there is a lot more supply (of oil and natural gas) than there is demand, at this time.

“When you can reduce your debt and cut expenses to increase operating cash flow and earnings per share, you are managing right,” Womack said.

Looking ahead, Womack said investors are examining various issues as they consider what companies are worthwhile investments.

“You have to look at various factors,” he said. “Growth in earnings per share, year-over-year, certainly is one thing to evaluate.

“But are they growing their revenues and managing debt ratios? It could be tougher and tougher for companies to refinance debt, because that’s getting more costly.”

Beyond that, investors are also considering sectorwide trends.

The general goal, he said, is to buy shares in a company or sector that is bottomed out and have a chance to reverse course.

“Trends have been down for the energy industry and could remain weak for a little while longer,” Womack said.

“If we see an increase in demand for oil and natural gas, you could see that flatten or even reverse itself as commodity prices rebound. That could really help these companies’ cash flows and earnings per share improve.”

Jack Money

Jack Money has worked for The Oklahoman for more than 20 years. During that time, he has worked for the paper’s city, state, metro and business news desks, including serving for a while as an assistant city editor. Money has won state and regional...
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